In 2019, China's exports of rare earth products fell by more than 10%. In 2019, China exported 46,300 tons of rare earth products, a year-on-year decrease of 12.64%. The export value was US$440 million, a year-on-year decrease of 14.44%. The average price was US$9.5/kg, a year-on-year decrease of 2.06%. Among them, the export of rare earth compounds was about 39,500 tons, a year-on-year decrease of 13.51%, and the export value was about US$324 million, a year-on-year decrease of 10.76%. The average price was US$8.21/kg, an increase of 3.17% year-on-year; the export of rare earth metals was about 6,850 tons, a year-on-year decrease of 7.25%. The export value was about 116 million US dollars, a year-on-year decrease of 23.27%, and the average price was 16.94 US dollars/kg, a year-on-year decrease of 17.27%. As China pays more attention to strategic resources such as rare earths, the export volume of rare earths is expected to decline in the future, and the export prices of rare earths are expected to rise steadily. Export controls are about to take effect, and the upstream supply contraction continues. According to data from the General Administration of Customs, from January to October this year, China exported 28,700 tons of rare earths overseas, a decrease of 28.4% from the same period last year. With the official entry into force of the "Export Control Law of the People's Republic of China" on December 1, China's export supply of rare earths may be further reduced. Due to the high dependence of the global market on China's rare earths, the global supply of rare earths may shrink further after the implementation of export controls, which is expected to help the rare earth prices continue to rise. The value of strategic resources with Chinese characteristics is expected to be re-evaluated.
Rare earth is a modern industrial vitamin and a key element of many functional materials in the high-tech field. With the continuous advancement of the supply-side reform of the industry, the rapid development of various applications such as downstream magnetic materials, catalysis, and hydrogen storage of rare earths, the fundamentals may continue to improve, and the price of rare earths is expected to usher in an inflection point. China leads the world in terms of reserves, output, and consumption of rare earths, and has advantages in the layout of the entire industry chain. We expect that under the new situation, the strategic position of rare earth resources is expected to increase significantly, and the price of rare earths is expected to open up. Supply-side reforms have been steadily advanced, production indicators have been issued to regulate supply, the six major rare earth groups have been integrated, and the concentration of rare earth upstream resources has increased significantly. According to the “Thirteenth Five-Year Plan” of the rare earth industry, by 2020, the six major rare earth groups will complete the integration of all rare earth mining, smelting and separation enterprises across the country, forming a complete monopoly. The integration of the six major rare earth groups in 2017 has been completed. 22 rare earth mines and 54 smelting and separation companies have been integrated to form a complete monopoly on China’s formal rare earth resources. The smelting and separation capacity has been reduced from 400,000 tons to 300,000 tons. Concentration has been greatly increased, effectively alleviating the scattered, chaotic, and poor upstream supply, laying a solid foundation for the long-term price of rare earths. The 2020 production indicator will increase by 6.06% year-on-year. According to the data released by the Ministry of Natural Resources and the Ministry of Industry and Information Technology, the total amount of rare earth mining control index in 2020 will be 140,000 tons, a year-on-year increase of 6.06%. Among them, light rare earths were 120,850 tons, an increase of 7.78% year-on-year, and heavy rare earths were 19,150 tons, the same as last year. The mining indicators added in 2020 are all rock and mineral rare earths (light), and the indicators of ionic rare earths (mainly medium-heavy), which are China's advantageous resources, remain the same, reflecting the authorities' differentiated management of resources. In addition, because some companies with mining indicators have not put into production or reached full production due to environmental protection and other factors, and because the country has not been approved for rare earth mining rights for many years, a considerable number of rare earth mining rights have resource exhaustion problems, resulting in actual output It is difficult to reach the target quota, and it is expected that resource management and control will be further strengthened.
Supply and demand policies are both driven, and the price of rare earths is expected to grow. The prices of light and heavy rare earths have risen sharply year-on-year; the prices of light rare earths have continued to rise. Taking praseodymium oxide as an example, on November 24, China Rare Earth Industry Association data showed that among light rare earth oxides, the lowest transaction price of praseodymium oxide was 389,000 yuan/ton, a year-on-year increase of 43.01%. According to the research situation of the industry chain, we predict that the price in 2021 may exceed 600,000 yuan/ton. The price of heavy rare earths continues to rise. Taking terbium oxide as an example, on November 24, the China Rare Earth Industry Association data showed that among the light rare earth oxides, the lowest transaction price of terbium oxide was 5.995 million yuan/ton, a year-on-year increase of 79.22%. According to industry chain research, we expect 2021 The annual price may exceed 8 million yuan/ton. The global epidemic situation is improving, and the mismatch of supply and demand supports the price of rare earths. The global epidemic situation is expected to gradually improve, and rare earth prices may continue to rise. On the supply side, firstly, due to the impact of the epidemic this year, the supply of mines in Myanmar and Australia may shrink; secondly, China's rare earth export control may become stricter, and rare earth supply shrinkage is expected to further increase; thirdly, the mandatory plan for rare earth production may continue to exist. To sum up, the contraction of rare earth supply is expected to remain unchanged; from the demand side, with the gradual improvement of the epidemic, orders from downstream magnetic material factories have recently recovered more than expected, and downstream demand for rare earths may continue to recover. Rare earth prices are expected to be strongly supported and superimposed. At present, social inventories of rare earths are generally at a low level, and the mismatch of supply and demand may support the continued rise of rare earth prices.
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